Last week iron ore prices started to correct quite rapidly on the back of weaker sentiment in the Chinese finished steel market. The fall is currently continuing and could well have a quick impact on the market globally. This happened while some key trade discussions globally are continuing to cause concern in the market.

On 14 May iron ore prices almost reached $68/tonne cfr Qingdao, the highest level since March this year. By 18 May the price had fallen to around $66/t cfr Qingdao and at the beginning of the current week further correction took iron ore to below $65/t cfr Qingdao. This year the lowest level registered so far has been around $63/t cfr, a level which could well be reached again in the short term.

Earlier last week J.P. Morgan held its price forecast for the year at $66/t, compared to an average Kallanish index so far this year of $71.09/t it indicates that the market could well lose some ground, but not too much. The bank now believes that the iron ore market is essentially balanced.